Cabinet considers complete decontrol of diesel price

New Delhi: The Cabinet is considering a proposal to approve the complete decontrol of diesel pricing and is also likely to approve further cut in the subsidies on fuel. According to sources, the Cabinet can take up the suggestions of the Kelkar panel report on diesel pricing, and may also increase the cap on subsidised LPG cylinders.

The Kelkar Committee had in 2012 recommended that the government cut subsidies in three significant Fs - food, fuel and fertiliser - in order to narrow down the fiscal deficit. The committee had warned that India was on the edge of a 'fiscal precipice' and if measures were not taken soon, it would have a big impact on the Indian economy.

The Cabinet is likely to take up the suggestions of the Kelkar Committee report on diesel pricing.

The Committee, headed by former Finance Commission chairman Vijay Kelkar, had suggested phased elimination of subsidy on diesel and LPG in the next four years and reduction in kerosene subsidy by one-third by 2014-15.

However, the government had earlier refused to accept the recommendations of the panel, saying some of the subsidies being given by it were unavoidable. It had termed the suggestions of the panel as against government policies.